It’s very hard to predict what will happen in a few months, or years. Analysts and forecasters are paid large sums to try. They might get it right a few times, but most of them don’t have a reliable track record.
This is why it’s always a good idea to plan for the worst, even though it might not happen.
For example, say the US and North Korea situation got out of hand. Imagine the ramifications if the US was forced to launch missiles directed at the rogue state.
I personally don’t believe it will come to that, but it’s a possibility.
Or what if the US Federal Reserve has got it all wrong by lifting interest rates right now? American households have piles of debt. But the US government has far more. Higher interest might cause a lot of problems not just for US citizens, but also their federal government.
A Lot of Uncertainty
What am I getting at?
Right now, there’s a lot of uncertainty, which makes it very hard to predict what will happen next.
That’s why billionaire hedge fund manager Ray Dalio is telling investors to buy more gold.
As reported by Bloomberg:
‘Hedge fund manager Ray Dalio recommends investors consider placing 5 percent to 10 percent of their assets in gold as a hedge against current political and economic risks.
‘Dalio, the idiosyncratic billionaire who leads the world’s largest hedge fund at Bridgewater Associates, said the market may be challenged by current events, according to a LinkedIn post on Thursday.’
‘The emerging risks appear more political than economic, which makes them especially challenging to price in.
‘…we can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don’t have 5-10% of your assets in gold as a hedge, we’d suggest that you relook at this.’
Year-to-date, gold is up 11.2%, trading at US$1,287 an ounce. And it could likely run up even further if something drastic does happen towards the end of this year.
Junior Analyst, Markets & Money
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